Alaska may sue BP for lost revenue over pipeline closure

Aug 10, 2006, 21:14 GMT

Seattle - Alaska Governor Frank Murkowski is considering suing British oil giant BP for compensation after the company was forced to shut down half of the state's largest oil field because of leaks in a corroded pipe, the Alaska Daily News reported Thursday.

Murkowski launched an official investigation into the incident and alleged that BP misled the state with satisfactory maintenance reports. He told state legislators that the shutdown was costing the resource-rich state more than 6.4 million dollars per day in lost tax revenues.

The governor instituted a state hiring freeze because of the financial impact of the shutdown and estimated that the state could lose 1.3 billion dollars by the time the problems are fixed.

'We will hold British Petroleum accountable for past and future field management decisions,' Murkowski told Alaska's legislature.

He ordered the Alaska attorney general to review the state government's legal rights including holding BP fully accountable for the lost revenue.

Murkowski questioned how a company that made 7.3 billion dollars in profit in the last quarter had skimped on the cost of properly maintaining the vital pipeline.

Murkowski told legislators that his administration will mandate that oil and gas facilities in the state 'must be properly maintained.'

'Alaska has had a wake up call. With 86 per cent of our revenues coming from oil taxes, we are vulnerable to any decline in production,' Murkowski said.

BP is currently assessing whether it can keep operating the western half of the Prudhoe Bay oil field, after shutting the eastern section down Monday. The oilfield produces 400,000 barrels a day, or 8 per cent of US output.